US stocks rise modestly on good reports

Wall Street today had a muted reaction to upbeat reports on US consumer confidence and the gross domestic product, closing narrowly mixed as investors stayed cautious after Monday’s big rally.

Analysts said many investors had anticipated the good news in the previous session, when the Dow Jones industrial average rose 119 points.

“Bottom line, the economy’s overall health is playing a greater role for the time being in determining the market’s direction,” said Joseph Keating, chief investment officer at AmSouth Asset Management. “All the economic data since August point to the fact the economy is strong.”

The Dow closed up 16.15, or 0.2%, at 9,763.94.

Broader market measures finished mixed. The Nasdaq composite index fell 4.10, or 0.2%, to 1,943.04 after Monday’s advance of 53 points, or nearly 3%, the biggest gain for that measure in almost five months.

The Standard & Poor’s 500-stock index gained 1.81, or 0.2%, to 1,053.89, following an advance of 16.80.

The Commerce Department said the economy grew at an 8.2% annual rate in the third quarter, the fastest pace in nearly two decades. Today’s revised gross domestic product was a full percentage point higher than the 7.2% growth rate estimated a month ago.

Separately, the New York-based Conference Board reported that slow but steady improvements in the job market helped push consumer confidence in November to its highest level in more than a year.

The market has fallen in recent weeks as investors grappled with a weakening dollar, which makes US securities less appealing to foreign investors, and concerns that stock prices might be a bit high.

Last week, the dollar slid to a new low against the euro, but recovered some on Monday to help fuel a stock rally. However, the dollar pulled back today despite the strong economic news.

Industrial issues, whose fortunes are closely tied to the twists and turns of the economy, were among the Dow’s stronger components: Heavy equipment maker Caterpillar advanced $1.70 to $75.04, and chemical maker DuPont rose 59 cents at $40.55.

Drug stocks sagged amid news that the Senate gave final congressional approval to sweeping changes for Medicare. The measure includes a new prescription drug benefit for 40 million older and disabled Americans. Merck & Co. fell 67 cents to $41.42, and Johnson & Johnson declined 79 cents at $50.69.

Citigroup rose 14 cents to $46.88 after the bank announced a deal to buy a consumer finance business from Washington Mutual. Washington Mutual dropped $1.60 to $44.95.

Xerox Corp. advanced 82 cents to $11.44 as both Lehman Brothers and Merrill Lynch upgraded the stock following the copier company’s upbeat analyst conference on Monday.

Advancing issues outnumbered decliners 9 to 4 on the New York Stock Exchange. Volume was light.

The Russell 2000 index, a barometer of smaller company stocks, rose 3.67, or 0.7%, to 543.18.